Easyjet boss lashes Ryanair chief

EASYJET boss Stelios Haji-Ioannou launched an extraordinary attack on his main rival Ryanair today, calling into question the Irish budget airline's accounting policies and suggesting that Ryanair's ageing fleet risked an air accident.

The attack, through the letters page of the Financial Times, ups the ante in the war of words between Stelios and Ryanair's Michael O'Leary and comes as easyJet shareholders today vote through the £257m merger with Go.

Ryanair has been basking in the glory of breaking through the £100m-a-year profit level reported earlier this month when it said that while easyJet-Go may be a bigger airline in terms of passengers carried, the enlarged no-frills operator makes much less in profits and is 60% more expensive in average air fares.

Writing in the FT, Stelios accuses O'Leary of being short-termist in his pursuit of profit: 'Judging which of the two variations [in business model] is likely to create more shareholder value in the long run, certain points should be considered.

'Ryanair is using 20 aircraft that are fully depreciated as they are about 23 years old. Old aircraft flatter profits in the short term and in my opinion have more to do with management's attitude to the risk of damage to reputation as a result of an accident involving an old aircraft than to the long-term business model. Moreover, Ryanair recently changed its depreciation policy from 20 years, which easyJet still uses, to 23 years.'

The letter, in response to O'Leary's goading that easy-Jet will end up imitating British Airways or Lufthansa, marks a departure for the two airlines, which have previously concentrated on attacking the full-service airlines.

Stelios accuses Ryanair of taking advantage of low Irish tax rates, having a near monopoly on Irish routes, aping easyJet's concentration on increasing load factors and shifting sales to the internet and failing to disclose the financial inducements it gets to fly to out-of-the-way secondary airports.

'I predict that Ryanair will increasingly use more expensive airports as it moves closer to the easyJet model,' said Stelios, who next year stands back from control of easyJet to concentrate on the 2004 float of his easyCar rental business. 'The two airlines are not as dissimilar as Ryanair may want you to believe. One difference is its preference for short-term wins versus my preference for greater terminal value of the investment.'